Which Credit Score Is Used for Mortgages?

When you apply for a mortgage, your credit score helps lenders understand how you’ve managed debt and how likely you’ll be able to repay your home loan. Most lenders review credit information from the three major credit bureaus and use your middle score to help evaluate your application. Because your credit score can affect your approval odds, loan options, loan terms and interest rate, improving it before you apply may help you feel more confident as you move through the mortgage process.

How Mortgage Lenders Evaluate Credit Scores

Mortgage lenders use your credit score to get a clearer picture of how you’ve managed credit in the past. While the exact process can vary by lender and loan type, here’s how lenders typically review credit scores during the mortgage process.

1. Credit scores can vary by bureau and scoring model: The three major credit bureaus – Equifax®, Experian™ and TransUnion® – collect credit information that may be used to calculate your credit scores. Lenders may review scores based on FICO® Score models, VantageScore® models or another approved scoring model.
2. Each borrower has their own credit profile: Each applicant with enough credit history will have their own credit scores when applying with a spouse, partner or co-borrower. In general, higher scores are viewed more favorably by lenders because they may suggest a stronger history of managing debt responsibly.
3. Your credit scores can vary: Your scores may not be the same across all three credit bureaus or scoring models. This can happen because each bureau may have different information in your credit report, and each scoring model may weigh that information differently.
4. Mortgage lenders look at your full credit health: Lenders don’t look at your credit score in isolation. They review your broader credit history to help determine whether you qualify for a mortgage. Many lenders use a tri-merge credit report, which is a single report that combines credit information from Equifax, Experian and TransUnion, and pick the median, or middle, credit score to help evaluate your application.

You can check your credit scores before applying for a mortgage to better understand where you stand. Just keep in mind that the scores you see may differ from the scores your lender uses because of differences between credit bureaus, scoring models and the timing of the credit pull.

Which Credit Score Do Mortgage Lenders Use the Most?

For many mortgage loans, lenders commonly use Classic FICO® Score models. These mortgage-specific scores can vary by credit bureau, which is why a lender’s score may differ from the score you see through a bank, credit card company or free credit monitoring service. The name will vary based on the credit bureau, so this is what each one calls this classic score:

• Equifax: FICO® Score 5
• Experian: FICO® Score 2
• TransUnion: FICO® Score 4

After reviewing scores from the three bureaus, lenders may use the median, or middle, score to help make a lending decision. They’ll also consider your broader financial profile, including your income, debt and credit history.

What Impacts the Credit Score Used for Mortgages?

The same factors that affect most credit score models can also impact the credit score used for mortgages. Understanding these factors can help you see where you may be able to strengthen your credit before applying for a home loan.

• Payment history: Payment history is the biggest factor in most credit scoring models. Making payments on time can help support a stronger score, while missed or late payments may lower it.
• Amount owed on outstanding debt: The amount of debt you carry, especially compared to your available credit, can affect your score. This is known as your credit utilization ratio, and lower utilization is generally viewed more favorably by lenders.
• Credit history: The length of your credit history can also play a role in your credit score. Accounts that have been open and managed responsibly for a longer period may help show lenders a more established borrowing history.
• Credit mix: Credit scoring models may also consider the types of credit accounts you have, such as credit cards, auto loans, student loans, or personal loans. A healthy mix of different loan types may show lenders that you can manage different forms of credit responsibly, but you don’t need to take on new debt just to improve your credit mix.
• Amount of new debt: Recent borrowing activity can affect your credit score, especially if you’ve opened several new accounts or applied for multiple forms of credit in a short time. Lenders may view too much new debt as a sign that your financial situation is changing.

Because multiple factors influence the credit score used for mortgage loans, it’s helpful to understand how your everyday credit habits can affect the score a lender reviews.

What Credit Score Is Needed for a Mortgage?

Different lenders and mortgage types may have different credit score requirements, so there isn’t one number that applies to every borrower. The score you may need depends on the loan program, the lender’s guidelines, and the rest of your financial picture, including your income, debt, and down payment.

• Credit score for conventional loans: Conventional loans typically require a credit score of 620 or higher. However, your credit score is only one factor lenders review when deciding whether you qualify.
• Credit score for VA loans: The Department of Veterans Affairs doesn’t set one minimum credit score for VA loans, but lenders can set their own requirements. VA loan credit score requirements often fall around 580 – 620, and Freedom Mortgage requires a minimum credit score of 550.
• Credit score for FHA loans: FHA loans may be an option for borrowers with lower credit scores. While FHA loan credit score requirements can be as low as 500 with a 10% down payment, or as low as 580 with a 3.5% down payment, Freedom Mortgage requires a minimum credit score of 550.
• Credit score for USDA loans: USDA loans typically require a credit score of 620, but some lenders may accept lower scores with manual underwriting. Your eligibility can also depend on your income, location and other loan requirements.